Pharma megadeals do nothing for neglected medicines

The announcement that the company is to pursue AstraZeneca, despite being rebuffed in January, comes a week after Swiss firm Novartis and GSK of the UK, swapped assets. The deal strengthened Novartis’s already pre-eminent position in cancer drug development, and reinforced GSK’s dominance in vaccines. “By doing that, they both played to their strengths,” says John Carroll from the online industry bulletin, FierceBiotech.

Frank Orthbandt of FitchRatings in London, a global agency assessing the value of deals, says that this kind of asset swapping is now the industry norm. “It’s too capital intensive to invest across many areas, so it’s better to be a leader in a specific area, but you need to be sure you’re going to be world class if you’re going to swap or buy major assets,” he says.

By contrast, there seems to be less scope for Pfizer to improve its standing by gobbling up AstraZeneca, says Carroll, because neither is dominant in fields where they overlap.

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No love for antibiotics

There is little hope that pharma megadeals will do much for neglected medicines, such as new antibiotics and drugs for tropical diseases such as malaria. “Companies don’t make much money from antibiotics, although some smaller biotechnology companies are developing them,” says Carroll.

Disease-wise, cancer is definitely the hottest area of investment, and this is one area where Pfizer hopes to boost its prospects by buying AstraZeneca. “Cancer is the big one, as people understand the biology much better and there are startling new drugs coming through,” says Carroll.

At the other end of the spectrum, companies are shying away from areas like depression. “People don’t fully understand the biology, it’s very hard to tackle in the clinic with high failure rates, and there are large placebo effects,” he says.